david's pay last year was $100,000. his pay this year increased to $115,000. the consumer price index increased from 100 to 115 over the same time period. what has happened to david's real income from last year to this year?

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Business

Sarah Lyons

10 August, 08:52

david's pay last year was $100,000. his pay this year increased to $115,000. the consumer price index increased from 100 to 115 over the same time period. what has happened to david's real income from last year to this year?

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Answers (1)

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Alonso Meza · Answer 1

David's real income did not change

Explanation:

Someone's real income can be seen how much money an individual makes after accounting for inflation.

David's real income did not change as a result of inflation.

Although there was an increase in his salary, there was also a corresponding increase in the consumer price index. This means that things got more expensive and the same amount of things he could buy before his salary raise is still equal to the same amount of things he can buy after his salary raise.

Hence, his real income has remained unchanged because of inflation.